Economic Crisis Will Define 2009 As Watershed Year For Communications Marketplace

By PRESS RELEASE — December 19, 2008

Yankee Group unveiled its top 10 predictions for 2009, projecting that the economy will drive profound changes to forever alter the communications marketplace. The report, "It's the Economy, Stupid: Yankee Group's 2009 Predictions," discusses the effect of tightening budgets on consumers, enterprises and network builders, and predicts these groups will modify spending and consumption habits in critical ways that will ultimately outlive the current economic conditions.

Yankee Group views the momentum toward Anywhere -- or ubiquitous connectivity -- as irreversible and predicts the financial crisis will evolve the trend, not bring it to an end.

"In this global economic crisis, necessity will force adaptation. The communications sector is notoriously slow to change and will have to redefine its spending and consumption models in order to survive," said Zeus Kerravala, Yankee Group senior vice president of research, and report co-author. " Hold on to your seats: 2009 will be a year to remember."

Following is a sampling of the predictions.

Anywhere Consumer Predictions

Premium brands will lose market share. Consumers will never quit the mobile habit, but they will demand better value from their services, which will drive short-term experimentation and change long-term brand loyalty.

Cord-cutters will emerge from the economic mist. Large numbers of consumers will cut the broadband cord for good in favor of wireless. Consumer fixed-to-mobile substitution will accelerate, driven by a value imperative and a change in consumer habits.

Anywhere Enterprise Predictions

Wired switch port sales will decline for the first time in history. Wireless LAN will transform from being an augmentation to the wired network to being the primary means of deployment. This will cause a slowdown, and ultimately a decline, in wired network switch port sales by the end of 2009.

Desktop virtualization will replace PC replacement. Mass workforce consolidations, especially in the financial services market, will force enterprises to look for ways to provision vast amounts of desktops to absorbed workforces in a fast, cheap and secure manner. 2009 will be the year that enterprises move away from the pilot and evaluation stages and finally take the desktop virtualization plunge.

Anywhere Network Predictions

Two of the eight global network equipment manufacturers will be forced out of major markets. Spurred by market consolidation and tighter capex budgets, two giants among Alcatel-Lucent, Cisco, Ericsson, Huawei, Juniper, Motorola, Nokia Siemens Networks and Nortel will be forced to exit major service provider business lines and/or significantly reorganize and scale down.

Subsidies on smart phones will strangle operator profits. The current two-year service contract requirement for devices such as the Apple iPhone and the BlackBerry Storm are out of sync with shorter innovation, refresh and consumer demand cycles. Operator profitability on these devices will suffer as a result.

The people of Yankee Group are the global connectivity experts -- the leading source of insight and counsel trusted by builders, operators and users of connectivity solutions for nearly 40 years. We are uniquely focused on the evolution of Anywhere, and chart the pace of technology change and its effect on networks, consumers and enterprises. Headquartered in Boston, Yankee Group has a global presence including operations in North America, Europe, the Middle East, Africa, Latin America and Asia-Pacific.

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